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Start-up Mistakes Entrepreneurs Make

Entrepreneurs often find themselves in a dilemma soon after they have started their businesses. Things may not function as expected. At one point in time, the business might face a number of inexplicable hassles. In the end, the question is very common - ”What went wrong?”

We have put forward the most common start-up mistakes that entrepreneurs commit:

When you carefully examine failed businesses, most of the reasons for the failure point to an unnecessary need in the first place. The backwash of such a result are poor sales and high expenses. The key is to sell what the people want to buy.

Insufficient Cash
Meager capital is an important reason for initial under-performance. Entrepreneurs might fail to analyze how much will be spent on each transaction and operation. They might also underestimate a few start-up costs. Gestation periods between a sale and income might not be taken into account at all. On the whole, ignorance on costs will lead to a deficiency in cash. It is true that cash flow is related to profits.

Failure in Planning
Failing to plan is planning to fail. Without planning, an entrepreneur cannot bridge the gap between his expectations and accomplishments. It is not necessary that all plans be accurate orwork efficiently --there are incorrect plans too. In such cases, plans should be flexible. But planning should never stop as it is the wheel that sets things in motion.

Low Pricing
Pricing is the visible message that is sent to the market along with the product. It is a misconception that low pricing will help in immediate sales and offer better competition in the market. However, the truth is far from what is generally perceived. Pricing on a reasonable level is not wrong. The price needs to appeal to the customers and that is all it takes to get the sales going. A low priced product is viewed as a cheap commodity without quality. Learn to price the product fairly.

Trying to do Everything
Trying to do everything is just wishful thinking. In reality, it is just not credible. The path to failure lies in trying to please everybody. For instance, you cannot offer the best quality of electronic gadgets and then price it moderately. Quality demands high pricing. High pricing will convince the customer that the product is of good quality. This system needs to be acknowledged well. Doing everything will make you lose focus on the important things that will help in improving standards.  

Idea Vs. Opportunities
An idea cannot become an opportunity unless it is filtered and refined. An idea remains an idea until any business gain is formed out of it. An idea might be golden but an opportunity is a gem. An entrepreneur should take an idea and make realistic advances like sales forecasting, cost of sales, market trends, expenses, etc. Available resources should be taken advantage of. An entrepreneur with just an idea might look opportunistic, but the perception is superfluous.

Source of Investment
A number of blogs and books might advise you take up the initial winning investment from outsiders,but the real and reliable resource is bootstrapping. There are high end start-ups who have emerged out of investor's money. However, investors need to start seeing the greenbacks very soon. There is no exit unless the company is relieved of the debt. There is an escape route of going public, but that does not happen frequently. If an entrepreneur cannot stand on par with the outsider's investment, it is wise to revise the plans and start off with a smaller financial budget.

Equity Misconception
Making the equity count is the biggest challenge. Equity implies 100% ownership. Only loyal and dedicated individuals can be included in this list. The founder stock belongs to the people who have been key assets to the company. During start-up, the stock might be strewn over to service vendors which will cause mayhem once the company takes off. There will be misunderstanding and hassles.  

Incomplete Teams
Your business is not a Do-It-Yourself kit. You need a team to develop the company. There are people with different skills who, if put to good use, will serve as a backbone for the company. Attorneys, accountants and tech professionals are very much needed as a team. If you have decided to do everything by yourself, there is a chance that the business will never see daylight.

Unrealistic Forecasts

That forecasting is a speculative concept is a well known fact. However, there needs to a bridging between the entrepreneur's expectations and the projections. Unrealistic forecasts will lead to unnecessary capital needs, cost of sales and will end up in failure. Creating a forecast is not enough, it needs to be backed by earlier sales achievements, the current market trend and customer needs. The key is to make the forecast work and meet the numbers in real life.

One false step could be venomous and prove fatal to the company. Entrepreneurs might be enthusiastic and possess the zeal to work har,d however, smart work exceeds hard work. An entrepreneur needs to visualize the ground realities before setting foot into a business.

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